The flexible budget for direct materials is computed in which of the following ways?

Question

BlackTom AI · Accepted Answer

Flexible budget for direct materials equals standard quantity allowed (SQ) × standard price (SP). A flexible budget adapts the budgeted cost to the actual level of activity but holds standard costs fixed so management can analyze variances.

1) Relevant concepts
- Flexible budget: budgeted cost for the actual output using standard (expected) input usage and standard prices.
- Standard quantity allowed (SQ): standard input per unit × actual units produced.
- Standard price (SP): the predetermined cost per unit of input.
- Material variances: Total materials variance = (AQ × AP) − (SQ × SP), which can be split into price and quantity variances.

2) Step-by-step reasoning
- We want the budgeted (expected) material cost for the actual output level, not the actual cost incurred.
- Compute how much material should have been used for the actual output (SQ).
- Multiply that quantity by the standard price (SP) to get the amount that should have been spent.

3) Example with intermediate calculations
- Suppose standard material per unit = 2 kg, SP = $5/kg, actual units produced = 100.
- SQ = 2 kg/unit × 100 units = 200 kg.
- Flexible budget for materials = SQ × SP = 200 kg × $5/kg = $1,000.
- If actual quantity used (AQ) = 220 kg and actual price (AP) = $4.50/kg:
  - AQ × AP (actual cost) = 220 × 4.50 = $990.
  - AQ × SP = 220 × 5 = $1,100.
  - SQ × AP = 200 × 4.50 = $900.
  These illustrate differences between actual cost and various budgeted figures.

4) Why the correct answer is correct
- The flexible budget represents the cost that should have been incurred at standard usage and standard price for the actual output, hence SQ × SP.

5) Why other options are incorrect
- AQ × SP uses actual usage (includes inefficiency) instead of the standard quantity allowed; that gives a “what was spent if standard price applied to actual usage,” not the flexible budget.
- AQ × AP is the actual cost incurred, not a budgeted (standard) figure.
- SQ × AP uses the actual price, mixing standard usage with actual pricing; flexible budget uses standard prices to isolate variances.

6) Conclusion
The flexible budget for direct materials is Standard quantity allowed (SQ) × Standard price (SP), which matches the provided correct answer.

The flexible budget for direct materials is computed in which of the following ways?单项选择题

类似问题

Which budget evaluates the results of operations at the actual level of activity?

Flexing the budget means

Variable cost per unit and total fixed costs remain constant in the relevant range. Therefore, total fixed costs should not change with the change in activity level and you would take the variable cost per unit times the new activity level to generate the flexible budget line item.

When the activity level of the master/planning/static budget differs from the activity level (cost driver, allocation base; e.g., machine hours), then a flexible budget is needed to match the same activity level that the actuals are based on to truly analyze revenue and spending variances.

Which of the following is TRUE of flexible budget?

Laurie Inc.’s static budget for 10,000 units of production includes $60,000 for direct materials, $44,000 for direct labor, fixed utilities costs of $5,000, and supervisor salaries of $25,000. A flexible budget for 12,000 units of production would show

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单